A stable government gets stable bond rating

Only two counties in the state get the top Aaa bond credit rating from Moody's Investor Services, Orange and Westchester. Such a rating lowers the cost of borrowing, which in turn helps the county keep its budgets in check.

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Posted Jul. 24, 2013 at 2:00 AM

Posted Jul. 24, 2013 at 2:00 AM

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Only two counties in the state get the top Aaa bond credit rating from Moody's Investor Services, Orange and Westchester. Such a rating lowers the cost of borrowing, which in turn helps the county keep its budgets in check.

According to Joel Kleiman, Orange County finance commissioner, the county's conservative fiscal policies and "continued vigilance by every member of county government have allowed us to maintain this highest rating level from Moody's."

While Moody's likes what it sees now, it is not quite so confident about what might be coming. Previous ratings were classified as stable, meaning that they were not likely to change. This one came with a negative classification, meaning that the bond rating could deteriorate in the future if the county failed to address some of the fiscal challenges.

Moody's does not identify those challenges. Nevertheless, the county executive, Ed Diana, says he knows what they are talking about — the Valley View nursing home.

"The Legislature is so remiss and just made it a bad choice and bad decision by not making a long-term positive yes or no on the future of Valley View, because that is draining the surpluses very rapidly and they knew it, we told them, and they still have not done that," Diana said.

Diana is right in one sense. The county Legislature has failed to make a long-term decision on Valley View. But there is a very good reason. Legislators are not sure if they can trust the figures that Diana and his departments provide when it comes to the operation of the nursing home. When legislators tried to pin them down, Diana and his department heads lawyered up and refused to testify under oath.

A county executive willing to work openly and completely with his Legislature would have long ago come up with verifiable figures and then taken part in the dialogue that leads to a reasonable conclusion. That's what happened in Ulster County, and it has calmly and profitably sold its nursing home while Orange County is still nowhere close to a decision.

There are three options facing the county. Sell Valley View because the county cannot afford to operate it; keep Valley View because the county can afford it; or keep Valley View and raise taxes to pay for increased costs.

Moody's does not mention Valley View because it is not in the business of micromanaging. Moody's does not care what option Orange County chooses as long as the choice leaves the county able to pay its bills in full and on time. That's the trick to an Aaa rating. If Orange County is likely to keep on paying in full and on time, that will wipe out that negative warning and bring a return to a stable one.

Stability comes when an executive and legislators work through their differences to reach a conclusion that the county can afford to fund.

Instead of engaging the Legislature in yet another budget fight over incomplete funding for Valley View, it's up to Diana to show the people in Orange County, and the people at Moody's, that he can lead the way toward stability.